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Wednesday, December 28, 2011

The new get-rich rules

SO WHAT IF THE economy looks like it's on the brink of another downturn?

Because this could jolly well be the year that you start your journey towards amassing an abundance of wealth.

How?

Here's the plan: an easy financial tune-up that will save you plenty
of cash, and smart investment tactics to help you make loads more.

SEE WHAT YOUR BANK IS HIDING FROM YOU

Start your tune-up at where you keep by what you find.

Most recently, a technical glitch at HSBC caused its customers to be
charged more than they had actually spent. Although some discrepancies
were significant enough to be spotted easily, others were not.

Some banks also charge miscellaneous fees that you may not be aware
of. And if you don't examine your bank statements regularly, you could
miss them entirely.

Take action if you see something you don't like.

"Some institutions will throw in a freebie as a form of service
recovery for mistakes they've made, or even drop monthly fees if you
make certain adjustments to the way you bank," says Greg McBride, a
senior banking financial analyst.

SLASH YOUR MOBILE BILLS

Eighty per cent of mobile phone users overpay for service, says
Schwark Satyavolu, co-founder of Billshrink.com (a website that analyses
how you spend your money and advises you on how to save).

Not by just cents, either, but by an average of $200 a year. If
you're not wedded to the latest phone - can you live without an iPhone
4S? - a no contract plan will probably save you big.

You can get unlimited phone, texting and surfing the Net for roughly
$40 a month. If you can't abandon your gadget, you can at least save on
texting by using free apps like Textplus, IMO and Textnow.

And don't rule out prepaid - if you're either a very light or very heavy (unlimited) user, this may be the best option for you.

Next, call your service provider. Let the company know that you've
seen its competitor's ads and you're thinking about switching if you
don't get a better offer. More often than not, the rep will pony up a
"special promotion" to save you some bucks.

INTERROGATE YOUR CREDIT CARD

We can never stress this enough: As long as you have credit card
debt, you'll never get rich. It's a simple truth. Accept it, then do
something about it.

The problem isn't really the amount you owe, but what it's standing
in the way of: a downpayment on a property, your ability to invest in
stocks with good ROI, a rainy day savings account.

And don't just transfer your debt from one low-rate card to the next. Eliminate it!

Take out a low-interest personal loan to clear all your credit card
debts, and work to pay off that loan as quickly as possible without
incurring new debt on your cards (meaning, don't even use them).

BADGER YOUR BOSS

Okay, now that you're losing less money, it's time to bring in more.

Here's what not to do: March into your boss's office and declare: "If
you won't pay me what I'm worth, I'll find a company that will."

Instead, lay the groundwork now for a big raise next year, says Deborah Kolb, a negotiation consultant.

Start by periodically reminding your boss how much you do - just drop it in the conversation.

Next, schedule a series of quick meetings to update him on the
projects you're working on. Finally, six months before the next round of
raises, meet with him formally.

Tell him exactly what you believe you're worth, Kolb says. Then ask
him for a six-month plan, with specific goals, to take you there.

PLAY THE MARKET LIKE A PRO

These smart investment tactics will ensure that looking at your bank balance puts a smile on your face.

Mix the risk Spread your investments across two or more funds in
different sectors to guard against a single investment underperforming,
says Darius McDermott, a financial analyst.

Play the long game

Smarter investors opt for drip-feed schemes known as "dollar cost
averaging", where you buy "units" on a month-bymonth basis. It removes
the need for a big lump sum and has good returns in volatile markets.

Watch and learn

Review your investment by comparing it every six months against a
benchmark such as the STI index, says Ben Yeardsley, an international
funds and wealth manager.

READ THE ESTATE SECTION

Many Singaporeans have become instant millionaires over the past
decade through real estate. But there's really no telling when the
bubble may pop, given that the economy may be heading for a downturn.
Yet, none of this matters.

It's still a smart investment for two reasons: First, every payment
you make builds equity in the property - it's like putting money in a
savings account (unlike paying for your car, which is a depreciating
asset).

And, second, interest rates on housing loans are currently very low.
Combine these two factors and the "real" monthly cost is half of what It
seems. If the house rises in value quickly, that's icing on the cake.